Weekly commodity wrap-up

Water Wars Worsening

Major rivers continue to run dry in Europe and our Western U.S. Now attention has suddenly turned to the Yangtze, China’s longest river. The world’s most populist nation and major U.S. trading partner is experiencing the worst heat wave on record and the lowest water levels as well. Crop production is severely threatened while difficulty in shipping crops and industrial commodities has caused a state of emergency. Some cities are turning to cloud-seeding in hope of relief.

In addition to state versus state negotiations and urban versus agriculture challenges, the severe disruption of transportation channels in Europe and the disruption of water rights on our own Colorado River are leaving extensive regions with little recourse other than fry or fight. Few, whether urban or rural, are willing or able to establish the severe conservation practices that would be needed in order to continue with an agricultural economy, lifestyle, or level of health our civilization has been accustomed to for the past few hundred years.

Friday, our National Oceanic and Atmospheric Association released their latest global data. The report indicated July 2021 outdid itself as the hottest month ever recorded in history. The global combined land and ocean surface temperature was 1.67 degrees F above the 20th-century average of 60.4 degrees F.

Grain markets were mixed with December corn about unchanged on the week, closing at $6.20 per bushel. December wheat traded at $7.70, down 40 cents from last Friday. November soybeans traded for $14.05, down about 25 cents on the week. Cattle, another thirsty market, was roughly unchanged for October and delivered at $1.450 per pound.

Crude Slides on Demand Fears, Recovers at Week’s End

Fears of global recession and COVID-related shutdowns in China sent crude oil and its products on a renewed downward path early in the week. Germany, in addition to losing its main river transport line, is also suffering from Russia’s cut-off of the Nord Stream pipeline. That was their major source of fuel until Russia invaded Ukraine. Natural gas in Europe rose even more than in the U.S. France has its own separate, but drought-related energy problems, as their nuclear power plants can’t get enough water for cooling.

Crude oil for October was down roughly $1.50 bbl at week’s end, trading at $89.90, whereas October gasoline futures traded at $2.80 minus tax and transportation costs, with a slight change down from last week. Natural gas for September U.S. delivery went for $9.30, up over 70 cents from last Friday.

Commodity Quiz

What is Stagflation? Who coined the term and what were the circumstances? Answers next week.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, KS. He can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.